The expected invasion of cheap labour from the new Eastern EU countries did not take place
Published: 12 May 2005
Like most other EU 15 countries, but in contrast to the neighbouring country Sweden, Denmark introduced a set of transitional rules as of 1 May 2004 concerning the immigration from the new Eastern member countries of EU. A majority in the Danish Parliament and the social partners supported the rules, which was aimed at protecting the balance at the Danish labour market as well as protecting the social welfare system against 'social tourism' from the East. As Denmark has no national minimum wage defined by law or by collective bargaining, the initiative also aimed at supporting the existing collective agreement system, in broad terms called the Danish Model, where wages are agreed at sectoral level and company level. The worst scenario was that otherwise the country would experience an invasion by Eastern European workers, shopping around, working at wages well below the collectively agreed levels and sooner or later to be counted among the unemployed (DK0312103F [1]).[1] www.eurofound.europa.eu/ef/observatories/eurwork/articles/transitional-scheme-agreed-for-workers-from-central-and-eastern-europe
In December 2003 the Danish Parliament passed a set of transitional rules with the aim to prevent an uncontrolable influx of workers from the new Eastern European EU-countries after the extension 1 May. The law demands that new workers work under the conditions of a collective agreement. One year after the extension it is a fact that the expected invasion did not take place. However, especially the trade unions have pointed out several pitfalls that can be used to circumvent the regulations.
Like most other EU 15 countries, but in contrast to the neighbouring country Sweden, Denmark introduced a set of transitional rules as of 1 May 2004 concerning the immigration from the new Eastern member countries of EU. A majority in the Danish Parliament and the social partners supported the rules, which was aimed at protecting the balance at the Danish labour market as well as protecting the social welfare system against 'social tourism' from the East. As Denmark has no national minimum wage defined by law or by collective bargaining, the initiative also aimed at supporting the existing collective agreement system, in broad terms called the Danish Model, where wages are agreed at sectoral level and company level. The worst scenario was that otherwise the country would experience an invasion by Eastern European workers, shopping around, working at wages well below the collectively agreed levels and sooner or later to be counted among the unemployed (DK0312103F).
According to the transitional law workers from the Eastern European countries can only obtain a working and residence permit if the work to be done in Denmark is a full-time job paid according to a collective agreement. A number of public authorities including the tax authorities, the police, the Danish Immigration Service (Udlændingestyrelsen) and the Regional Labour Market Councils (De Regionale Arbejdsmarkedsråd, RAR), which includes representation of the social partners, should monitor the observance of the rules, and a monitoring committee was set up in cooperation with the social partners at national level.
One year after it seems that the rules has worked in so far as the feared invasion has not taken place. As of April 2005 the Immigrant Service has received 5,167 applications for a working and residence permit from citizens in the new Eastern EU-countries. The current status is that 3,250 has received a permit. According to the provisions of the law the permits given are divided as follows:
64% were covered by a collective agreement at the company
10% were given to researchers and professional on individual contracts
26% of the permits were given to workers in companies covered by an adoption agreement
The Immigration Service informs that by the end of March 2005 there were 1,931 active working permits which is an increase of 342 since end of February. The difference between permits given and active permits is due to the fact that a number of the Eastern European citizens with a legal permit at the calculation date either had finished their work or had not started yet.
| Sector | Number of persons | Change since Feb 2005 |
| Agriculture and gardening | 838 | 153 |
| Industry | 165 | 12 |
| Building and construction | 172 | 26 |
| Trade, hotel and resaturant | 135 | 11 |
| Transport | 54 | 4 |
| Finance | 98 | 22 |
| Public and personal services | 375 | 77 |
| No data | 94 | 43 |
| Total | 1,931 | 348 |
As it appears almost half of the working permits concerns agriculture and gardening. The current number (838 persons) is a little below the number from December 2004 (886 persons) which most likely is due to a seasonally adjusted cycle within the sector. The number of permits within public and personal services is divided among health (167), associations and culture (110), education (72), and social institutions (17).
The majority of the permits are given to citizens from Poland (809), Lithuania (685) and Latvia (191).
The National Labour Market Authority (Arbejdsmarkedsstyrelsen) has estimated that the accession of workforce from the Eastern European countries currently has not had a generel effect on the Danish labour market. However, according to the labour market authority, the effect seems positive in agriculture and gardening where persons from the new EU-countries cover a large part of the demand for work that would otherwise be difficult to fulfill. This statement has been modified from professor of labour market studies, Per Konghøj Madsen, who has argued that the influx of workers from Eastern Europe will put a pressure on wages and the union density in the building and construction sector, as it is happening in Germany. The first signs are already seen in Denmark.
But all in all the invasion did not take place, and the authorities’ estimation of the situation is that the law has had a positive effect. But the success depends of the eyes of the beholder. Especially the unions in building and construction, represented by the cooperation cartel, the Building, Construction and Wood Industry Cartel (Bygge-, Anlægs- og Trækartellet, BAT) have on several occasions pointed at the pitfalls of the law (DK0404103F). Many citizens from the Eastern EU countries work in the sector as bogus self-employed (they are only working for one employer who also provides tools and materials), or as temporary agency workers, or for a company in for instance Poland, which provides workers for a contract in Denmark under the provisions of the law of posted workers. In these cases the collective agreements in Denmark are not in force or at least the coverage is blurred, as in case of the temporary agency workers. This grey zone thus both covers persons who are working illegally (under cover of being posted) and persons who can be said to fulfill the right of company establishment inside the EU. Although a manual has been produced for all parties involved (employers, unions, police) to make the rules more transparent and result oriented it is still difficult to determine in which cases the law has been broken. As expressed by a union leader from BAT: 'We have to check if posted workers from companies in Poland, etc. fulfill the terms of the law or if they in reality are hired by the company in Denmark. In this case we can demand that the company sign an adoption agreement or otherwise legally boycott the company. It is difficult. We have to do what they did in the infancy of the trade unions. We have to go out there and sign and defend collective agreements.'
Since 1 May 2004 the BAT cartel has reported 177 cases of illegal work to the police covering 710 citizens from Eastern Europe. The exact number of charges is not known, but one sentence (the first according to BAT) was passed in the Industrial Court (Arbejdsretten) in March 2005 over a Danish-Polish company, which had employed Polish construction workers under terms against the provisions of the law.
This information is made available through the European Industrial Relations Observatory (EIRO), as a service to users of the EIROnline database. EIRO is a project of the European Foundation for the Improvement of Living and Working Conditions. However, this information has been neither edited nor approved by the Foundation, which means that it is not responsible for its content and accuracy. This is the responsibility of the EIRO national centre that originated/provided the information. For details see the "About this record" information in this record.
Eurofound recommends citing this publication in the following way.
Eurofound (2005), The expected invasion of cheap labour from the new Eastern EU countries did not take place, article.
